Chinese tech IPO has a big first day

JD.com

Michael Nagle, Bloomberg

JD.com set Wall Street abuzz when the company priced its IPO at $19 a share, topping the expected range of $16 to $18. The company raised nearly $1.8 billion. Above, Richard Liu Qiangdong, founder and chairman of JD.com, center, applauds during an IPO ceremony at Nasdaq in New York.

JD.com set Wall Street abuzz when the company priced its IPO at $19 a share, topping the expected range of $16 to $18. The company raised nearly $1.8 billion. Above, Richard Liu Qiangdong, founder and chairman of JD.com, center, applauds during an IPO ceremony at Nasdaq in New York. (Michael Nagle, Bloomberg)

The malaise in tech and other risky stocks put a crimp in the IPO market, which was having its best performance in years. The shakeout also underscores the risks of Chinese tech stocks, analysts said.

Though economic expansion in China remains the envy of the developing world, the growth rate is slowing. And many analysts worry that the Chinese banking system and real estate market are dangerously overinflated.

Even as the U.S. stock market has risen strongly in the last few years, the Chinese equity market has stagnated. The market is down roughly two-thirds from its late 2007 peak and has generally moved sideways for most of the past two years.

There are many solid Chinese companies, including Alibaba, Baidu Inc. and Tencent Holdings Ltd., analysts said.

But several Chinese stocks have cratered.

E-Commerce China Dangdang Inc., an Internet retailer, surged 87% in two weeks in February and March before giving back all the gains since then. Youku Tudou, a Chinese Internet TV company, has slumped 45% since early March. Social networking firm Renren Inc. has lost 85% of its value since going public three years ago.

"There's an enormous bifurcation in the quality of the companies," Hanson said. "You've got really well-run innovative companies like Baidu and Tencent and Alibaba.

"And then on other side you have companies like Dangdang and Renren, a host of others, that are smaller and not very well run, but they were able to capitalize on the hype," he said.

Analysts think the worst is over for the Chinese Internet sector but doubt that every stock will recover.

"You're going to see the best names, not come all the way back but come much of the way back," said Max Wolff, chief economist at Citizen.VC, a research and investment firm. "You'll see the names that passively rode the [wave] stay under pressure."

Swiss banking giant Credit Suisse pleaded guilty to a criminal charge that it helped wealthy Americans dodge income taxes for decades, a plea federal officials said bolstered their efforts to show that no financial firm was too big to prosecute.

The consumer price index, a leading measure of inflation, fell last month into negative territory over a 12-month period for the first time since the fall of 2009, when the nation was just emerging from recession. It also fell from December, the third straight month-to-month decline.

Ana Redmond launched into a technology career for an exciting challenge and a chance to change the world. She was well-equipped to succeed too: An ambitious math and science wiz, she could code faster, with fewer errors, than anyone she knew.